Own Damage Cover for Motor Insurance – The New Change
When you buy a vehicle, it becomes your responsibility to take the necessary measures of safeguarding your own and your fellow pedestrians’ life. An accident can cause serious life and property damage to all parties involved. As per the Motor Vehicle Act of 1988, it is mandatory for all vehicle owners in India to buy third-party, limited liability insurance. Despite this, the IRDAI has reported that many people are failing to comply with the mandate. As such, the government has consulted the Supreme Court and the IRDAI and made an essential change to motor vehicle insurance. This article explains the own damage cover in insurance. Also, find out the new rules associated with motor insurance policy change.
Motor insurance policy new rules effective from 01st August 2020
Previously, vehicle owners could purchase a motor insurance policy that combined both comprehensive long-term insurance and third-party insurance in a single vehicle insurance plan. However, as per the new IRDAI directive, this policy will not be available any longer. The IRDAI cited several reasons for withdrawing the long-term insurance policy. As per their research, they reported that found motor insurance plans expensive and unaffordable, in comparison to the coverage they could avail. Furthermore, buyers did not appreciate the forceful or mandatory angle associated with buying vehicle insurance policies.
As per the new mandate, people who purchase a new vehicle after 01st August 2020 will be required to purchase long-term third party insurance. The premium amount for the three-year policy will remain the same, irrespective of the insurance provider you choose.
Change in own damage cover for motor insurance from 1st August
As per the IRDAI directive, vehicle owners can buy a new type of insurance policy, apart from a third party insurance policy and a comprehensive insurance policy. This vehicle insurance plan is known as the own damage vehicle insurance plan. Furthermore, the IRDAI offers some flexibility when it comes to own damage policy. As such, you can select any one of the two below-mentioned options:
- You can purchase a bundled vehicle insurance plan, i.e., a long-term third-party vehicle insurance plan which includes own damage coverage for one year
- You can buy two different vehicle insurance policies for the same vehicle – of which one provides own damage cover and the other covers you against third party liabilities.
Irrespective of the type of policy you choose, you can encash the accrued no-claims bonus and get a discount on premiums when you renew the policy.
Own damage insurance policy
Having explained the own damage policy change, let’s understand the meaning of own damage insurance policy. As is evident from the term ‘own damage’, the own damage insurance policy is a standalone vehicle insurance policy that covers you against losses and damages endured by your vehicle. It is a type of vehicle insurance policy that is primarily introduced to provide insurance cover to people who already have third-party coverage, but also want to insure their vehicles against accidents, collision, natural calamities and fire.
Coverage offered under Own Damage Insurance Policy
As per the motor insurance policy new rules, which led to the introduction of the own damage vehicle insurance policy, you can get the following coverage under the policy.
- Accidental damage endured by your vehicle due to fire
- Damage endured by your vehicle due to fire
- Damage endured by your vehicle due to natural calamities like earthquakes, floods, tornadoes, Tsunamis, hurricanes, etc.
- Damage endured by your vehicle due to human-made disasters such as riots, vandalism, theft, protests, etc.
Final note: With the introduction of the change in own damage cover insurance policy, vehicle owners have an additional, affordable option to invest in an all-encompassing vehicle insurance policy. As a policyholder, you should be aware of the extent of coverage you are eligible for, to sum assured you are likely to get, as well as the claim filing process. You can find the details of the same in your policy document. To know more about the own damage vehicle insurance policy before investing, you can reach out to us at PINC Insurance!